<<  <  >  >>

(The present value is the stream of future rev-

tral bank, www.bcra.gov.ar/publica/epub0001.asp.

enues, discounted more heavily the further in the

future the revenues are.) See Eduardo Levy Yeyati,

48. Banco Central de la República Argentina,

"10 años de convertibilidad: la experiencia

Communicación "A" 3387, December 7, 2001, www.

argentina," manuscript, Universidad Torcuatro

bcra.gov.ar/folio/A3387.pdf, and Communicación

Di Tella, pp. 30, 69, www.utdt.edu/~ely/

"A" 3470, February 8, 2002, www.bcra.gov.ar/

Convertibilidad.pdf.

folio/A3470.pdf.

49. In the United States, the requirement of 10 per-

42. Kevin Dowd, ed., The Experience of Free Banking

cent applies to accounts that banking regulations

(London: Routledge, 1992).

define as transaction accounts. Nontransaction

43. There are discussions of Argentina's experi-

accounts have no reserve requirement. Over the

ence in this period in John H. Williams, Argentine

last 10 years, "sweep" accounts that minimize

Trade under Inconvertible Paper Currency, 1880­1900

funds in transaction accounts have enabled banks

(Cambridge, Mass.: Harvard University Press,

to reduce their overall ratio of reserves to total

1920), chaps. 7­8; and Angel M. Quintero-Ramos,

bank deposits. Although Panama has no reserve

A History of Money and Banking in Argentina (Rio

requirements, it does have liquidity requirements.

Piedras, Puerto Rico: University of Puerto Rico,

Typically, an amount equal to 30 percent of

1965), chaps. 3­4.

deposits must be held in specified classes of assets.

Panama, Decree-Law 9 of February 26, 1998, article

44. See Dowd, The Experience of Free Banking, especially

46, www. superbancos.gob.pa/law9.htm.

the chapter "US Banking in the `Free Banking' Period";

Lawrence H. White, ed., Free Banking,3 vols. (Aldershot,

50. Decree 1570/2001; Banco Central de la República

England: Edward Elgar, 1993).

Argentina, Communicación "A" 3372, December 1,

2001, www.bcra.gov.ar/folio/ A3372.pdf.

45. J. Huston McCulloch, "Beyond the Historical

Gold Standard," in Alternative Monetary Regimes,

51. See Kevin Dowd, Laissez Faire Banking

ed. Colin D. Campbell and William R. Dougan

(London: Routledge, 1993), pp. 25­113; a more

(Baltimore: Johns Hopkins University Press,

skeptical view is found in Parth J. Shah, "The

1986), pp. 74­75; and C. A. E. Goodhart, "How

Option Clause in Free-Banking Theory and

History: A Reappraisal," Review of Austrian

Can Non-Interest-Bearing Assets Co-Exist with

Safe Interest-Bearing Assets?" British Review of

Economics 10, no. 2 (1997): 1­25, www.mises.org/

Economic Issues 8, no. 19 (Autumn 1986): 5.

journals/rae/pdf/rae10_2_1.pdf.

46. Scotland and Ireland had free banking in the

52. See Province of Buenos Aires, Ministry of the

1700s and 1800s, and Hong Kong had it from 1845

Economy Website on Patacones, www.ec.gba.

to 1935. Today, banks that issue notes in Scotland,

gov.ar/Financiamiento/Patacones.htm.

Northern Ireland, and Hong Kong do so under

reserve requirements like those that apply to an

53. Oscar Martinez, "Negocian el apoyo del FMI

orthodox currency board. See Bank of England,

para rescartar los bonos provinciales," March 30,

and "Cada vez más bonos," April 21, 2002, Clarín

"Fact Sheet: Bank Notes,"  www.bankofengland.

co.uk/banknotes/factnote.pdf; Hong Kong Mone-

(online edition), www.clarin.com.

tary Authority, "Bank Notes in Hong Kong,"

54. Banco Central de la República Argentina, "PDF

www.info.gov.hk/hkma/eng/currency/notes_co/

Publicación de Información Entidades Finan-

index.htm; Committee of Scottish Clearing

cieras," www.bcra.gov.ar/efpaginas/pubentfin.asp.

Bankers, "History of Scottish Banknotes," www.

scotbanks.org.uk/notes.htm; "Irish Paper Money,"

55. George R. G. Clarke and Robert Cull, "Why

www.irishpapermoney.com/history/hist17n4.html;

Privatize: The Case of Argentina's Public Provincial

and Websites of the note-issuing banks. In Scotland,

Banks," World Bank Research Working Paper 1972,

the Bank of Scotland is part of the HBOS Group;

September 1998, www.econ.worldbank.org/docs/

the Clydesdale Bank is part of the National Australia

703.pdf.

Bank group; and the Royal Bank of Scotland is part

of the Royal Bank of Scotland group, which includes

56. World Bank, Finance for Growth: Policy Choices in

England's National Westminster Bank. In Northern

a Volatile World (Washington: World Bank, 2001),

Ireland, First Trust Bank is part of Allied Irish Banks,

p. 124.

the Northern Bank is part of the National Australia

Bank group, and the Ulster Bank is part of the Royal

57. Frederic S. Mishkin and Miguel A. Savastano

Bank of Scotland group.

claim that "proponents of different strategies for the

conduct of monetary policy [such as dollarization]

47. Selected laws concerning the Argentine finan -

often have a tendency to argue that their preferred

cial system are available on the Website of the cen-

36